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Income (economic)
Income, refers to consumption opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings received... in a given period of time."Case, K. & Fair, R. (2007). Principles of Economics. Upper Saddle River, NJ: Pearson Education. p. 54. For firms, income generally refers to net-profit: what remains of revenue after expenses have been subtracted. In the field of public economics, it may refer to the accumulation of both monetary and non-monetary consumption ability, the former being used as a proxy for total income. Remuneration may be by salary or wages plus employee benefits. Income inequality Income inequality refers to the extent to which income is distributed in an uneven manner. Within a society can be measured by various methods, including the Lorenz curve and the Gini coefficient. Economists generally agree that certain amounts of inequality are necessary and desirable but that excessive inequality leads to efficiency problems and social injustice. National income, measured by statistics such as the Net National Income (NNI), measures the total income of individuals, corporations, and government in the economy. For more information see measures of national income and output. Full and Haig-Simons income Full income refers to the accumulation of both, monetary and non-monetary consumption ability of any given entity, such a person or household. According to the what economist Nicholas Barr describes as the "classical definition of income:" the 1938 Haig-Simons definition, "income may be defined as the... sum of (1) the market value of rights exercised in consumption and (2) the change in the value of the store of property rights..." Since the consumption potential of non-monetary goods, such as leisure, cannot be measured, monetary income may be thought of as a proxy for full income. As such, however, it is criticized for being unreliable, i.e. failing to accurately reflect affluence and that is consumption opportunities of any given agent. It omits the utility a person may derive from non-monetary income and, on a macroeconomic level, fails to accurately chart social welfare. According to Barr, "in practice money income as a proportion of total income varies widely and unsystematically. Non-observability of full-income prevent a complete characterization of the individual opportunity set, forcing us to use the unreliable yardstick of money income." On the macro-economic level, national per-capita income, increases with the consumption of activities that produce harm and omits many variables of societal health.Barr, N. (2004). Problems and definition of measurement. In Economics of the welfare state. New York: Oxford University Press. pp. 121-124 See also * Budgets * Economic security * Finance * Financial strain * Job security * Income disparity * Income inequality metrics * Income level * Poverty * Socioeconomic status * Taxation References *D. Usher (1987). "real income," The New Palgrave: A Dictionary of Economics, v. 4, pp. 104–05 External links * Income definition with explanations in simple terms Category:Income (economic)